"We're giving it all to them, but don't worry, they have your best interests at heart!"November 10, 2011 7:09 AMSubscribe

My aged parents are planning to cash in all their stocks and put them into an account in my two brothers' names to reduce the amount of money payable in fees to the government upon their demise. They have told me, more or less, not to worry, and not to doubt the good intentions of my siblings. How to respond to this?

My aged mother recently informed me that, in order to reduce the estate administration (probate) fees payable to the government upon her and my father's demise, they were going to sell all their stocks (wherein their wealth is concentrated) now and put the money into a joint account in my brothers' names. These same brothers have been helping them put their financial affairs in order, while (for different reasons) my sister and I are out of the picture with regard to all this.

When my mother first told me of their plan (over the phone), I expressed some mixture of surprise and concern, and her response to that suggested that she hadn't considered that my brother(s) might not be entirely worthy of their absolute trust. An accountant friend I mentioned these developments to (who has seen his fair share of nasty estate battles!) encouraged me to speak with a lawyer promptly, which I did.

The lawyer (a specialist in estate law with fifty years of experience) said their idea was terrible and ALWAYS leads to problems later on. He recommended another way of leaving their money in which probate fees could be avoided (known in Canada as an inter vivos or living trust).

I reported back to my father by email with what the lawyer had said. He wrote back that they were aware of such trusts, and that I need not worry about the fact that I am thousands of miles away from my brothers, that they "have [my] best interests at heart," and that my parents are leaving clear instructions how the money should be distributed upon their demise.

While they may indeed have faith in the good intentions of my brothers, it is no secret to anyone who has had the misfortune to hear more than a dozen tales of inheritance that the road to estate separation hell is paved with good intentions (especially when the legal foundation for those good intentions is weak or entirely missing).

I should emphasize that I am not stating that I believe they will not distribute the estate according to my parents' wishes. Structurally, however, the situation is leaving me (and my sister) entirely at the whim of their willingness to operate according to the highest ethical standard. I already have evidence, however, that such is not the manner of operation I can look forward to. (This "evidence," however, was clearly not taken as a sign of any failing of character when I pointed it out to my mother.) I might also mention that I have have exceedingly limited communication with my siblings in the decades since we lived together as children. We are also separated, as I mentioned, by thousands of miles, and i have only returned for visits to their area twice, since I moved away many many years ago. We cannot be called close or tightly-knit by any stretch of the imagination.

Another odd thing, from my point of view, is the fact that this is all being done to avoid paying what amounts to 1.5% of the value of the estate. That's $15,000 on $1,000,000. Not, in my estimation, a sum worth sowing the seeds of future sibling discord over. But my parents seem determined to refuse to even consider the possibility that there could be a negative outcome (for me, and, possibly, my sister) here. Which leads me to wonder if something else is going on here that is not being expressed verbally or directly (and of which my parents may not even be fully aware on a conscious level themselves).

I don't know if, at this point, I could provide even a mountain of evidence that their plan is misguided and have it be accepted by them as input worth considering (but then, I am the youngest and have never been taken seriously anyway...). But I am nonetheless interested in hearing the stories of others who have been in a similar situation, or from those of you who may have something to offer in the way of a more effective response to all this than my present one of just letting them all carry on in the direction they seem to be going with no interference from me.

I know nothing about estate law, but have you spoken to your siblings about their intentions?posted by Lieber Frau at 7:30 AM on November 10, 2011

Slightly away from your original question...but how is their health? You don't mention their ages or anything, but this kind of illogical behavior can signal early stages of dementia or other mental health problems that can come with an aging brain.

If you have a way to make sure they are of "sound mind" that may be worth it.

I am a lawyer who does some estate planning work. I am not your lawyer. (There, done.)

Perhaps you could re-emphasize to your parents that they simply talk to an estate planning lawyer, stating not that there is an issue of trust in your siblings but simply to confirm that this is the most sound strategy to protect their wealth. The lawyer you spoke with is correct; to simply put the money into someone else's account is an abominable idea, for a number of reasons. If you want to keep assets out of probate, you set up a trust and convey the assets into the trust.posted by chicxulub at 7:31 AM on November 10, 2011 [9 favorites]

Unless your parents are feeble minded then you must butt out. As long as they are alive, it is their money. If they want to squander it on cats and music boxes, they can. You stirring up stuff will only upset everyone and make you look like a money grubber.

Keep in mind that your brother lives near your parents, making him responsible for their care. He is the one that will be bringing them to the doctor and when they pass, he will be the one that will talk to the undertaker. He is carrying the biggest burden here and he knows the situation better than you.

Perhaps a better way to go about this, in addition to chicxulub's suggestion, would be: stocks aren't doing all that well right now (not as bad as 2008, but...). To sell now would be to lose a lot of value. Conveying the existing stocks into trusts would not involve this loss.posted by notsnot at 7:34 AM on November 10, 2011 [4 favorites]

I think you need to consider this money gone. This is your parents' money, and they've decided to leave it to your brothers. If your brothers later decide to give you some money, that will be a nice surprise, but for now, the money is gone to you. Unless your parents are mentally incapacitated, they've made a decision, and there's really not anything you can do about it. You'll drive yourself crazy if you keep pursuing it, and as you say, it's unlikely to work, since they're unwilling to listen to your very sound evidence.

I don't know what your relationship with your parents is like, but if my father did this, I would absolutely tell him that I considered him to have cut me out of his will. I wouldn't say it with malice, but just to let him know that I considered the money gone and not mine because he chose not to give it to me. Your parents can insist all they want that they intend the money to be shared among all of their children, but that's not what they've done here. They've given the money to your brothers, and if you have the kind of relationship where you can tell them that that's what they've done, you should tell them so.posted by decathecting at 7:35 AM on November 10, 2011 [47 favorites]

Have you not seen your parents but twice since you moved away? I cannot tell. But if you haven't, and your brothers are the ones taking care of them now, they probably have expenses related to this, and maybe your parents want to leave their money to them and not to everyone, and this is their way of warning you in advance.posted by jeather at 7:36 AM on November 10, 2011 [6 favorites]

I feel extremely unqualified to opine on the Canadian estate, probate and tax consequences described, since I do not have the faintest clue how Canadian estate planning practices need to vary from the US-based ones I'm familiar with.

That said, the "sell all our stocks and place them into a new account for estate planning purposes" sounds very strange. It it possible that the OP has simply misunderstood what's going on? Are the parents taking equities, liquidating them and putting cash into an account? Or are they merely transferring the equities (stocks) into a new account? In either case, in the US those actions would have significant capital gains and gift tax consequences if done exactly as described.

(In the US "cashing out" the stocks and transferring the proceeds to an account owned by the brothers would have step-up cost basis and gift tax implications. It would also be an odd motivation for greatly changing the asset allocation.)

Is it possible that the parents have set up an inter vivos trust, administered by the two (local) siblings, and that the OP just misunderstood the details of what's going on? It could be that since the OP is so distant and not involved with the details of the finances, the exact mechanics of the transfer weren't clear in the phone conversations. Likewise, if the mother isn't sophisticated financially, her ability to accurately describe what's going on may be limited.

It's also unclear to me exactly what the OP thinks the parents' intent with the money really is. Equal shares? Or something else? Communication is the key, and it seems like there just aren't enough facts here to understand what's going on.

I am totally unqualified to opine on any of the Canadian tax or estate issues. YANMC, TINLA.posted by QuantumMeruit at 7:44 AM on November 10, 2011 [2 favorites]

How to respond to this?

I would be insulted and hurt, and would tell them so. Not because of the money, but because they chose to leave me out. I would ask them if I have done something wrong, and why they feel that they need a proxy for me and my sister. I would tell them that 15 thousand to the million seems hardly worth it, and that I think there is an ulterior motive other than money behind this choice of theirs.

Ultimately, I would probably tell them I don't need the money through my brothers, either. And if they don't feel they should leave me anything, I understand it, but I really would like them to be honest about why.posted by Tarumba at 7:44 AM on November 10, 2011 [6 favorites]

Please listen to decathecting's post. Your situation is very close to what happened in my family. Even though my family is filled with caring and generous people, unsurprisingly, it still turned out badly.

With hindsight, here is what I would say:

"I understand that you have decided to give the inheritance to my brothers. As you have not made any solid legal provisions to insure that my sister and I will receive a share, then I consider her and I to be cut out of your will. If my brothers decided to share, then that would be very kind of them. However, since you are giving them all your wealth, I have no intention of counting on their good graces as kind intentions are not legally binding".

Harsh? Possibly. Firm? Definitely.

Then drop the subject and consider the money gone. They are giving it all to your brothers whether they intend to or not. The very best you can do is let them know this, after that, it is up to them.posted by Shouraku at 7:49 AM on November 10, 2011 [18 favorites]

As a member of a large family: I would throw a huge hissy fit. Express anger, betrayal, and dismay. Refuse to discuss the matter logically or listen to explanations. Use hyperbolic language about being disinherited. Do all of this even if you are perfectly calm and rationale. Bottom line they are refusing to listen to your reasoned objections. Emotional objections are your last card to play.posted by bq at 7:52 AM on November 10, 2011

"I understand that you have decided to give the inheritance to my brothers. As you have not made any solid legal provisions to insure that my sister and I will receive a share, then I consider her and I to be cut out of your will. If my brothers decided to share, then that would be very kind of them. However, since you are giving them all your wealth, I have no intention of counting on their good graces as kind intentions are not legally binding".

I'm not sure I'd say this precisely, but I might say something like it.

Money and inheritance are funny, funny things - people often don't put their own wills together well because they don't want to think about death; after a death, things that seemed inconsequential (a little money, a few possessions) can loom much larger than you thought they would.

These strong feelings are IME only fractionally about the money - they are about love and fairness and sorrow and memory and too often a will is experienced as the final verdict on whether and how much you were loved.

I was in a situation not unlike yours. Because I firmly believe that it is wrong and crass and base to squabble over money, it was very difficult for me to process my feelings of anger and neglect. In the end, I had a very low-key conversation with my parents in which I said a gentler version of the above - that I understood that they wanted to provide more for my sibling and that I respected their right to do what they wanted with their money. Just saying this helped me let go of a lot of bottled up feelings. In the end, since my parents had some legitimate reasons for favoring my sibling (sibling has greater needs than I do) BUT since they didn't want me to be disfavored or feel less loved, we have changed the arrangements to ones that still favor my sibling but that are more transparent and more equitable. Honestly, it was the discussion that was more important than the financial concerns - no matter what had happened, I could have accepted it if everything were out in the open.posted by Frowner at 8:02 AM on November 10, 2011 [5 favorites]

You know, it is your PARENTS' money; not YOURS. They could choose to leave you NOTHING. Your parents OWE you nothing.

Approach the topic like this and you won't be disappointed.posted by onhazier at 8:11 AM on November 10, 2011

I know nothing about estate law, but have you spoken to your siblings about their intentions?

It's unlikely that they'll say, "Oh yeah, I was planning on screwing out of a small fortune when mom and dad die."

This cannot possibly end well. My mother and her sibling all get along great, but when their last surviving parent died, a lot of valuable stuff mysteriously went missing from the estate.

At the same time, your parents appear to have made a decision regarding their finances, and it's theirs, not yours. At this point, maybe you could just send them a note: "I see you're going to go through with the transfer. I do not trust my siblings, and am hurt that you've chosen to leave me no share of your estate -- and no legal recourse to share in your estate -- should you die before me."

I was in a similar situation. I moved away; my brother didn't. My brother took on most of the burden of care as my dad aged, though I stayed in weekly phone contact and visited, including a caretaking visit. But my brother was the one who was doing the daily work, and even though he had demonstrated problems managing money, my dad gave him power of attorney.

Even though we were co-executors of the will and the will split everything 50-50, my brother controlled the money and all records of it, which resulted in a 10-year, very unpleasant long-distance wrestling match as I tried to get my share.

Since I had so much trouble when the will explicitly gave me money, I would interpret your situation as this: Your parents, for whatever reason, have decided to give their money to your brothers. They aren't able to say this clearly and directly. Don't count on receiving anything.

I agree that it might be a good idea to tell your parents, pleasantly but clearly and preferably in person, that this is your interpretation of their act, just in case they don't consciously realize what they're doing. I wouldn't blame them or say you're "hurt," because the brothers have been doing the heavy lifting, so it probably seems logical to your parents to favor them.posted by ceiba at 8:45 AM on November 10, 2011 [1 favorite]

You know, it is your PARENTS' money; not YOURS. They could choose to leave you NOTHING. Your parents OWE you nothing.

True but its not like they're blowing their fortune on a world cruise or leaving it all to charity. They're choosing to give it all to their 2 sons and nothing to their daughters. Its hard not to take that personally.

Consider yourself cut out of their will and act accordingly (whatever that may be for you).posted by missmagenta at 9:08 AM on November 10, 2011 [4 favorites]

The thing is, your parents' money is theirs and not yours - if they want to leave it to a home for stray cats (yay, kitties!) that's absolutely their right.

However, you are a family and not just a collection of strangers, and estates are never just - or even primarily - about money. For example, if you had a developmentally disabled sibling and your parents said to you "We're worried about Sibling's care - we love you very much and want you to have [keepsakes] but we feel like we need to leave most of our estate to guarantee that Sibling is secure", you would probably have some weak feelings of disappointment or greed or whatever, but you would almost certainly have much stronger feelings of support.

When your parents are doing something that substantially prioritizes your siblings over you and not giving a good reason like "we feel that since Brothers will be doing most of our care, we want to compensate them" plus doing this in a way that is extremely likely to create bad feeling and division among the siblings (which we assume is not what they want...unless it is?) then it seems totally legitimate to tell them how you're interpreting their actions. I'm about as Guess Culture as it gets, but there are times when Tell Culture is pretty important and "gee, mom and dad, you seem like you don't want to leave me anything AND you seem to be creating a huge painful conflict for the future, are you absolutely sure that this is what you want to do?" is totally legitimate.

Honestly, your parents are probably being stubborn and foolish (and this does sound absolutely foolish - if they really do want to leave everything to your siblings, it's far more sensible to put this into a transparent form) because they are anxious, unable to process their feelings about death and money, and have some unresolved stuff about the kids. Asking them just once more if they can possibly process some of that in the interests of the family isn't crazy.posted by Frowner at 9:23 AM on November 10, 2011 [3 favorites]

I'd say to still talk to your brothers about this, if you have a relationship with them that would make that feasible. Couch it in terms of "Hey, mom and dad told me this thing, and I've heard some stuff from other people that it's kind of a hair-brained way to dodge taxes, have you talked to them with a lawyer/accountant about it?" Emphasize the "I'm not sure this is the best/most secure way to do this, legally" angle.

If your brothers' reactions are "Yeah, we're doing this," then I'm not sure there's anything you and your sister can do, but there's a chance one or both might say "Yeah, mom/dad heard about it from [friend/magazine/other brother] and jumped on board, but it seems kind of weird to me," which would at least give you a better idea what's driving things.posted by kagredon at 9:43 AM on November 10, 2011 [2 favorites]

I would ask for a meeting with a mediator and your parents (and possibly your brothers too) where all of this is cleared and in the open. If the meeting is in the GTA I have an amazing mediator to recommend, otherwise, contact Royal Roads and ask for local suggestions.posted by saucysault at 10:45 AM on November 10, 2011 [1 favorite]

Can you talk to your brothers now and have them see that this isn't the best solution for everyone? Can you get them on your side? If you could, that would be the best way to resolve the problem, especially before the deed is done.posted by Vaike at 10:53 AM on November 10, 2011

You know, it is your PARENTS' money; not YOURS. They could choose to leave you NOTHING. Your parents OWE you nothing.

Right on, onhazier... except it is the siblings that owe each other, and their parents, nothing. Parents owe their children every advantage in life that is within their power to offer*. Parents that fail to thus provide for their children, or arbitrarily elevate one child far above another out of favoritism, are immoral failures as parents.

* May include "tough love", but there's nothing whatsover to suggest that is part of this story.posted by IAmBroom at 10:55 AM on November 10, 2011 [4 favorites]

Why can't they put equal amount in 4 accounts (one for each of you) now? That would be my question.posted by murrey at 10:59 AM on November 10, 2011 [6 favorites]

He wrote back that they were aware of such trusts, and that I need not worry about the fact that I am thousands of miles away from my brothers, that they "have [my] best interests at heart," and that my parents are leaving clear instructions how the money should be distributed upon their demise.

Can you ask for more information on this? Can you get a copy of these instructions? The phrasing makes it sound like they have left written instructions, a copy of which might come in handy for you, if things fall apart.posted by cranberrymonger at 1:04 PM on November 10, 2011 [1 favorite]

Call your siblings and suggest the inter vivos trust. Better to have this battle now, with the pains it brings, rather than later.posted by Ironmouth at 1:06 PM on November 10, 2011 [1 favorite]

I have seen things like this in my own family, and I agree that you and your sister are being cut out of the will. It's possible they're telling you about it as a way of making sure you don't count on any money from them while still retaining a fig leaf plausibility of 'oh no, we love our children equally!'

Either that or your two brothers, being close by, have been working on them to do this for months and your parents have given in under the pressure.

Either case, you're not going to be getting any money from them.posted by winna at 1:24 PM on November 10, 2011 [4 favorites]

I would agree that it's best to deal with this one way or another now. If it waits until your parents demise it will surely result in estrangement.posted by bq at 1:28 PM on November 10, 2011 [2 favorites]

If you have a way to make sure they are of "sound mind" that may be worth it.

I understand the impulse but really, do not do this. A close friend of mine tried to do it (in Canada) and it was a tragedy. Her aging father did indeed have diagnosed dementia and was also being financially manipulated by his daughter, but it was not possible to successfully legally challenge his will, and trying to do so destroyed my friend's relationship with her entire family, including her father in the final years before he died.

Decathecting is correct: assume the money is gone, and tell them so. I would phrase it something like this:

You've told me my brothers will look after my interests. But, what's actually happening here is that from a legal perspective, you are not making provisions for me in your will, and it will be up to my brothers to decide what happens to your estate. Since you haven't made legal provisions to ensure anything different happens, I will assume that I will receive nothing from your estate. I find that surprising and hurtful, and it makes me wonder why you would handle it this way. But I respect that it's your decision to do what you want with your own money.

And then let it go. Many many families are destroyed (and a lot of wealth is lost) in estate battles. Your brothers are in a perfect position to do whatever they want. They can start using cash for their own expenses as soon as they have control of it, and once your parents die they can easily inflate expenses related to the death and its aftermath, and they can use the property as they see fit, including converting undocumented property to secret cash. All that is totally normal: it happens all the time, even in 'nice' families.

I saw this happen to my friend. She fought for what she believed was her share of the estate, and ended up settling for about 30K out of 500. She was fuelled by her sense of betrayal, but she wishes now she hadn't done it. It was painful and destructive and not worth it.posted by Susan PG at 3:41 PM on November 10, 2011 [4 favorites]

Mom and Dad, I think it's not fair to make Bro1 and Bro2 do all the work, take all the responsibility, and maybe even have tax problems. If you would prefer to leave your estate entirely to One and Two, that's absolutely your decision. I'd very much like to know why, though. If you intend to distribute your money in any specific way, a will is a really good idea. In any case, I love you, and I hope you get to live a long time and spend all your money.

Money makes people behave in interesting, and often unkind, stingy, weird ways.posted by theora55 at 3:46 PM on November 10, 2011 [4 favorites]

onhazier: You know, it is your PARENTS' money; not YOURS. They could choose to leave you NOTHING. Your parents OWE you nothing.

Approach the topic like this and you won't be disappointed.

Please don't listen to this nonsense, OP. Your parents' stated intentions are for you to get some of this money. They are just going about it in very stupid way. Don't let some stranger try to guilt you into accepting this absurd turn of events.

In the unlikely event this is just your parents' attempt to cut you out of the will without telling you, then they've really brought this misunderstanding on yourself, and I wouldn't worry about it.posted by spaltavian at 8:28 PM on November 10, 2011 [1 favorite]

I have dealt in estate planning and estate litigation but this isn't by any stretch legal advice. I just want to write that I have observed elderly folks who really really believe that the one child or two children they give their money to will follow their wishes with respect to the ultimate distribution upon their death. I usually try to persuade them that it's not an issue of trust (it's usually the kid helping them at the time), but what they are trying to do is exactly what a last will n testament is for, with the added bonus of judicial supervision to guide the executors.

That said, I recommend that you encourage them to speak with an estate planner. In the States, people try to avoid probate by, for instance, putting a kid's name on their house deed, so it passes to them by operation of law. Because they haven't spoken to a professional they might not realize that they are saddling the kid with capital gains taxes from when they bought the house. If the kid received the house in inheritance, the tax upon selling would be on the capital gains from the date of inheritance rather than when mom n dad bought the house. For instance.

There are other mechanisms in the State (dunno canadian law) like payable of death or transfer on death accounts that remain in the account holder's name but passes by operation of law to the named party upon the death of the account holder. Safer than joint names for tons of reasons. In the States, a joint account could be considered an asset that can be levied on if, for example, the beloved son/joint account holder gets into an accident and gets a judgment entered against him. Things happen.

Also, there is something called a "constructive trust" in the States. It's an equitable remedy imposed under certain circumstances. One such circumstance is when a person forks over assets to another for the purpose of benefitting a third person. "Give this house to my son when he graduates from college" kinda thing. It would be a stronger case if there was a writing by your parents detailing the distribution. If so (and if canada has a similar remedy), you could ask the courts to enforce your parents' trust reposed in your siblings.

Oy. At least your parents should talk to professionals. Maybe encourage your receiving siblings to, too. There could be unforseen consequences to accepting a sizable inter vivos gift. Good luck to you and your family.posted by Jezebella at 5:11 PM on November 12, 2011

« Older Where to stay in Hollywood Beach Florida | Is it creepy to donate to charity with ulterior... Newer »

Tags

Share

About Ask MetaFilter

Ask MetaFilter is a question and answer site that covers nearly any question on earth, where members help each other solve problems. Ask MetaFilter is where thousands of life's little questions are answered.